European Nations Shrinking And Growing
We will show you a forecast of what the population sizes in different European countries will be in 2050. Some nations are growing, some are shrinking. What would be the effects of such shrinking populations? We have seen it before in Japan, but the last time it happened in Europe was when the plague was ravaging the continent. That is, apart from the occasional setback due to war, but on the larger scale those were generally small and short-lived.
What effects should we expect from population decline and how can we cope with these?
The graph below shows us the forecasts, from the population in 2016 to the expectation of 2050. We can see that some countries, like the United Kingdom, are expected to continue with a growth in their population. While others, such as Germany, are likely to stagnate or experience population decline. Keep in mind that all of these numbers already include immigration. Due to the fertility rates every country’s native population will shrink.
All Increase Is Immigration
So, when the UK goes from 65.6 to 77, this gap of 12 million is filled entirely with immigrants. The UK has a fertility rate of only 1.8, which is not enough even to remain on a constant level. Depending on the demographic make up of the UK, it will thus need additional migrants on top of the 12 million just to maintain a population of 65.6 million in the first place.
We Have Seen Population Decline Before
Medieval Europe, after the plague had done its damage, had a drastically smaller population. Estimates state that around a quarter of the population vanished during the plague, equal to a 25% decrease over a few decades. The results? Wages increased as hands to work on the farms were in high demand. While Europe had plenty of land, it had few people willing to work on it. The law of demand and supply thus ensured higher wages for unskilled labour.
This created a huge rise in wealth for the average person. The amount of gold, fertile lands, houses and farmsteads were the same as before – only fewer people were around to take advantage of it. Some believe that this boom in wealth triggered the Renaissance. An excess of disposable income, with food and housing being relatively cheap, allowed the economy to thrive. Demand for luxury items created new jobs and pushed people into the cities. For those that survived the plague, the future was bright.
Of course the modern world is not equal to the world of medieval Europe. Our government are laden with debt and pension promises to its elderly. Due to the structure of the pension scheme, a new generation of workers is required to pay for the pensions of the elderly. Instead of saving up for your own pension and receiving it at the end of your life, many countries implemented a system where you rely on the next generation to pay it.
When the new generation is smaller than the old one, that creates difficulties. It is a shortsighted system implemented after the baby boom of the 1950’s and 1960’s, without considering that at some point the population could shrink.
Government debt at the same time is measured in comparison to the country’s GDP. If the country’s debt rises by 10%, but their GDP has risen with 10% as well, their debt to GDP will remain the same. Although GDP depends on the productivity of a person, it also depends on the amount of people there are in the country’s workforce. Less people leads to a smaller workforce, which results in a lower GDP. A lower GDP, leads to a worse debt to GDP ratio. A worse debt to GDP ratio, leads to higher interest rates on the markets. Which in turn leads to more debt due to having to borrow the money to make the interest payment.
For politicians, a growing population is definitely easier to manage. Population shrinkage may force governments to embrace a policy of austerity, regardless of there being an economic recession.
So What Is The Real Problem?
For the average citizen, a shrinking population would likely lead to higher wages, cheaper houses, more spacious living and a possible return to free parking. On top of that there might be fewer traffic jams, less crowds on public transport and numerous other benefits.
The flip side lies with big corporations and governments. Big corporations would see their wages increase and profits decline. Governments would find themselves in a difficult situation due to their huge government debts and pension schemes.
Whose interests are being served by encouraging immigration in order to off-set the ‘problem’ of a shrinking population?